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Graham’s Section:

Mincon (LON:MCON)

Share price: 88.5p (pre-market)

Market cap: £188m / €212m

This is an Irish engineering group that designs, manufacturers, sells and services rock drilling equipment. Perhaps we can think of it as the “anti-Somero” (since the equipment from Somero Enterprises (LON:SOM) is designed to create perfectly smooth surfaces!). Like Somero, Mincon sells its own proprietary equipment, though Mincon also sells some 3rd-party gear.

Today, Mincon publishes its results for 2022, and here are the highlights:

  • Revenue +18% to €170m, with 19% growth in its own products vs. just 10% growth in 3rd party products. Own products are now responsible for 83% of total revenue.

  • Gross profit +11% to €54m.

  • Operating profit +9% to €19.7m

  • Net income +1% to €14.7m

Financial results

As you might notice from the above, there is a disappointing lack of progression as we go down the income statement: the percentage increases get smaller rather than larger!

This is worth investigating, as usually we want operational leverage to produce the opposite result.

First, the reduction in the gross profit margin: this is caused by two factors. 1) Input cost inflation, although the company says…

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